Cramer: Treasury, Take Over Fannie, Freddie

Fannie Mae and Freddie Mac finished Monday trading in positive territory, while the Dow itself dropped 242 points. That’s funny, considering the fact that Fannie and Freddie are the whole reason the stock market’s under pressure.

Last week’s hopes that the Treasury Department would step in and take over the two government-sponsored mortgage companies – the reason for that late-week rally – were dashed, at least temporarily, when Freddie Mac today sold $2 billion worth of debt. The move had some on Wall Street thinking that Fannie and Freddie wouldn’t need a bailout. As a result, they went up, Cramer said, while “the market went and rolled over.”

Fannie and Freddie are just part of the story, though. Oil’s low enough that now we’re waiting for housing to fall in line. It’s the only way the market’s going to stabilize. But that’s not going to happen if inventories go up at the same time prices go down, and that’s what happened today. (Not to mention, Fannie and Freddie take losses every time the value of a home drops.) This news, on top of the Fannie-Freddie problems, is what hurt us today.

The way Cramer sees it these days are going to be regular occurrences as long as the Treasury waits to take over Fannie and Freddie for the good of the market and the economy.

“We will not find a bottom until these two companies get nationalized, taken over, confiscated – I don’t really care what you call it,” Cramer said, “and their debt is formally guaranteed.”

The problem is that both Fannie and Freddie are well connected on Capital Hill, enough to give Treasury Secretary Henry Paulson pause. But “if we have to wait until after the election to do so then believe me, we’re going back to the horrors of July 15 without a doubt,” Cramer said of the market’s lowest close since midsummer 2006.

Sounds like it’s time for another Cramer crusade. Tonight on Mad Money he started another countdown, a la XM -Sirius , to mark the time it takes for Paulson and the Treasury to take action. Because everyday Paulson doesn’t, we can expect to be down 241 points.

“I wish it weren’t so,” Cramer said, “but wishes, like hopes, just aren’t part of the equations.”